Category: Fuller’s

Fuller’s is selling its beer portfolio to Asahi. The commercial logic of this is undeniable. The issue is, many of us place sentimentality above commercial logic.

And Vintage Ale. And Dark Star, And Cornish Orchards.

As someone who (a) loves beer and (b) also aspires to being seen as a level-headed commentator with a degree of insight into the market, whenever something like this happens I have two reactions: the emotional and the analytical. Sometimes they match up with each other. Other times they don’t.

So let’s get the emotional reaction out of the way first: when I saw Asahi trending on my Twitter timeline on Friday morning, and then clicked on it to see what it was about, I was absolutely gutted. People asked me for my reaction on Twitter. The editor of Imbibe phoned me to see if I had a comment on it. An email thread of beer writers asking if anyone knew before the announcement or had any hot take on it spiralled through my inbox. And I had no words at all. I felt a bit stupid. The thing was, I didn’t understand it.

I don’t want to sound too melodramatic: it wasn’t like a bereavement or anything. It was more like, imagine you have two mates. One of them is a bit lairy and is often asked to keep it down in the pub. The other one is quiet and thoughtful and one of the sweetest people you know. And one day, someone says, “Hey, there was a ruckus in the pub last night. The police were called and your mate was arrested.”

“I’m not surprised. He probably had it coming,” you reply. “You know what he’s like.”

“No, not him,” the person says. “Your other mate! The quiet, nice one.”

The offence is the same. But it feels worse because of who did it. Fuller’s don’t owe me anything, nor do they have any obligation to anyone else. But I had an idea in my head of the kind of company they are – entirely of my own creation – and just like it was for many people when Beavertown did their deal with Heineken, that idea now seems tarnished. Like I said, it’s an emotional reaction. It’s pointless trying to pick it apart, analyse it or argue with it – it’s just how I feel.

Now, given a day or two’s thinking time, here’s the rational reaction: one, it was probably as inevitable as it was surprising. And two, it’ll probably be OK.

Why was it inevitable? Because it’s part of the pattern. A few years ago, I was invited to be part of a panel for a Q&A session at a Greene King management awayday. There was me, and a bunch of serial entrepreneurs, City analysts and financial people. I was asked to speak first. I was doing the Cask Report at the time, and I spoke about how cask ale was looking good, and how that meant Greene King were in a good place if they stuck with it. And everyone else on the panel said, “Why are you talking about beer? It’s irrelevant. It’s the pubs that matter. This is a property company, a retail company. That’s where all the money is. The brewery is just a distraction.”

If you’re only looking at the money side of things, this is inarguable. In the early nineties, when the Beer Orders mandated that breweries could no longer own thousands of pubs, every one of the ‘Big Six’ brewery conglomerates that had dominated British brewing since the sixties eventually decided to sell off the beer and hang on to the pubs (which is why we’re in the extraordinary position of not one of the top ten beer brands in the UK – one of the world’s greatest brewing countries – being owned by a British company.)

Beer is in long-term decline, and brewing is a low-margin business. Pubs are property, and property is worth a lot of money. Pubs also sell a lot more than beer – as a sector, they now make more money from food than drink. If you had to choose to give up one or the other, only the most sentimental of brewing companies would choose to stick with the beer.

Of course, Fuller’s were not forced to choose between one or the other. They’re well below the limit for the maximum number of pubs a brewer can own. And yet they decided to dispose of the brewing business anyway.

From what I can understand from off-the-record chats, very few people in the business had any inkling of this happening. Not only were they not told, they were always under the impression that the board at Fuller’s were indeed very sentimentally attached to the brewing business. Ever since Young’s sold its brewing operations and shut its brewery in Wandsworth in 2006, there has been speculation that Fuller’s would – or even must – do the same. But the received wisdom among the upper echelons of the business was that the families of Fullers and Turners who still occupy board positions wouldn’t want to face the ignominy of turning up at their boxes at Twickenham, Lords, Glyndebourne or wherever and having to introduce themselves as ‘shopkeepers’ rather than brewers. I guess they’ve swallowed their (London) Pride on that score.

I’m writing this blog post in a newly opened Fuller’s pub. Like every Fuller’s pub that’s been opened or refurbished in the last few years, it’s magnificent. We hear a great deal about pub closures, and while Fuller’s have long received praise for their brewing prowess and approach, they’ve not received enough credit for the care, attention and confidence they show in the pub sector. £250m, minus costs and yachts, houses or whatever else the beneficiaries might buy, remains a significant chunk of money to invest in pubs. Those pubs will all still stock Fuller’s beers, as Asahi will be their main beer supplier.

From Asahi’s point of view, this sale sees them building up a very respectable portfolio of western beer brands now. I have to admit that as a drinker, the prospect of Fuller’s, Dark Star, Meantime and Pilsner Urquell, plus Cornish Orchards cider, all on the same team, is an enticing one. Martyn Cornell also raises the sharp observation that this is a foreign lager brewer making a massive vote of confidence in British cask ale. Fuller’s flagship beer, London Pride, has been suffering sustained decline, squeezed between the big multinationals’ marketing power and the rise of craft beer. London Pride and the rest of the Fuller’s portfolio now belong to a company with much deeper pockets.

And the point many of us miss is that these big companies have a global outlook. You have a well-respected traditional British beer called LONDON PRIDE that now has access to huge distribution in big, beer-hungry, and often massively Anglophile markets in Central Europe and Asia. People often ask me why the hell Carlsberg bought a toxic brand (within the UK beer bubble) called London Fields. Same reason.

Many who, like me, remain sad about the deal despite this commercial logic, try to put their fears into rational terms by suggesting that a multinational lager brewer might screw up their beloved beers. I genuinely don’t think this will happen. Asahi has absolutely no experience in cask ale. They wouldn’t risk blowing their £250m investment by trying to change what they don’t understand. They’ll leave Fuller’s and Dark Star well alone to do what they know how to do best, merely providing them with more production capacity and wider distribution, and a shitload more health and safety notices around the workplace. That’s what they did with Meantime. And after a couple of false starts, they’ve actually handled Pilsner Urquell pretty well.

I’m almost talking myself into cheering this sale rather than mourning it. But I can’t quite get there. It’s not just the keyboard warriors who want to keep craft beer pure even as they sit in comfortable corporate jobs drawing salaries from big multinationals who are sad about this sale. Brooklyn Brewmaster Garret Oliver told me that, “Fuller’s, more than any other brewery, is responsible for my becoming a brewer.” Last year I interviewed John Hall, founder of Goose Island, when he came to Fuller’s to brew a collaborative beer to celebrate that company’s 30th anniversary. On business trips to Europe, he used to detour via London simply so he could drink London Pride at the Star Tavern, a Fuller’s pub in Belgravia. When he finally changed out of his business suit and into brewer’s overalls, he brewed Honker’s ale to try to emulate his favourite beer. Sierra Nevada’s Pale Ale began life as an attempt to imitate Fuller’s ESB. ESB itself is now a category, a bona fide beer style brewed all over the world and judged in international competitions, when it was once simply the name of a tasty, strong beer in the Fuller’s portfolio.

Fuller’s was the brewery that inspired the breweries that inspired the modern craft beer boom. Arguably no other brewery in the world is as responsible for shaping craft beer. These individual stories of inspiration – and there are many more – cannot be measured on a balance sheet. But they create value nonetheless.

Asahi are not evil and they’re not going to screw up these beers. Fuller’s are not sellouts who deserve to be shunned by beer ideologues. And yet we’ve still lost something. We’ve lost some of beer’s romance and heritage. We’ve lost a sense of stability and continuity. We’ve lost a bit of magic. Yes, I’m being sentimental. But even the most hard-nosed businessman should be wary of scorning or dismissing such sentimentality. Because it’s the basis of loyalty – no, devotion – a fierce passion for some beers and breweries that few if any other products can summon among their core customers.

My warning to Asahi would be to respect this irrational devotion and sentimentality and to honour the beers and the brewery that created it. I suspect they will do a fairly decent job of that, because the business they just bought depends on them doing so. But it still won’t quite be the same.

Yesterday, it was announced that Dark Star Brewing had been bought by Fuller’s. In a much longer reader than I’d anticipated, here are some thoughts on how we might process such an event if it’s our favourite brewery being acquired…

You say ending, they say new beginning. Who’s right?

In every business, companies get bought and sold all the time. Brewing is, when all is said and done, a business first and foremost, in that if you don’t make more money by selling stuff than you spend on making it, you cannot survive.

But to many, craft brewing often feels like something more than just a business. It’s also a movement. Our favourite breweries often represent a set of principles and attitudes, a lifestyle, perhaps even a moral point of view, as well as making beers we enjoy drinking. This might entail a commitment to experimentation over convention, independence over conformity, living large rather than being cautious, or some other kind of anti-establishment or anti-corporate stance. Many craft beer fans are stuck in corporate jobs themselves, unable or unwilling to take their own risky leap into the unknown, and so they live vicariously through their favourite brewers, buying their beers to support principled decisions and actions they identify with and aspire to.

When a brewery gets bought, depending on the circumstances, it can feel as though people you believed in to live the dream on your behalf have turned out to be just like everyone else – they’ve disillusioned you and let you down. Alternatively, it may be that they stood heroically for as long and they could, but eventually had no choice to succumb, proving that a rebellious, anti-establishment stance is always ultimately doomed to failure.

These are not always rational or fair reactions, and they’re certainly not always justified, but given the high degree of emotional involvement around craft brewing, they’re entirely understandable.

Craft brewers have a long history of collaboration with each other, but rarely, if ever, do two craft breweries of comparable size decide to merge to further their mutual interest. Invariably, it’s a case of a larger, older, more conservative and established business buying a smaller, younger, more adventurous one. And that’s always going to set the alarm bells ringing. Instinctively, that alarm is rationalised through a fear that the beers will change: the accountants and marketing people will get involved. They’ll cut costs so the beer won’t be as good. They’ll dumb it down to appeal to a mass market. They’ll close the brewery down and brew it in a big factory instead, and it will never taste the same. Then you move on to the company itself: people will lose their jobs, and I care about these people (even if I’ve never met them.) But it’s the emotional bond, the identification with the brewery, that underlies such concerns.

But such takeovers are going to become increasingly common over the next few years. Craft beer as an overall segment looks set to grow indefinitely, even if the rate of that growth will slow down as the scene matures. But the number of outlets available in which to sell craft beer are arguably fixed – the number of pubs is declining. Supermarkets are steady. Specialist bottle shops are growing, as are alternative outlets such and festivals and special events. But these account for a tiny proportion of the total route to market. We’ve had such an incredible growth in the number of breweries in the UK – more than trebling since the millennium – that we have a massively increasing number of breweries chasing a limited number of fonts on the bar and spaces on the shelf. The most exciting – and, it has to be said, the most fashionable – breweries have no trouble securing their route to market. But many struggle to get space. Even when they get a place on the bar, the fickle consumer says, ‘Yes, I’ve had that one, what else have you got?’ and there’s always another one waiting to take their place.

Some brewers just can’t make a living. Others are getting by, but want to grow so they can make themselves and their families more financially comfortable, or hire more people so they can work fewer than eighty hours a week. Growth takes investment, and investment requires more growth to pay it off – if you can secure it in the first place in an uncertain financial climate when you’re one of several hundred breweries seeking it. For some, the answer is crowdfunding, but how many breweries are you going to invest in? Sometimes, selling simply makes most sense. And like I said, it happens in every single industry.

So when your favourite brewery goes, is it a catastrophe or is it salvation? Ultimately, only time will tell. I hate making predictions because they’re often wrong. But there are some questions you can ask that might provide clues – if you can discern the true answers beneath the spin, that is…

Did the brewery want to sell or not?

If it’s a hostile takeover, you can be sure there will be blood. But such takeovers usually only take place if both companies are already listed on the stock exchange. If a brewery is privately owned, no one can force them to sell. Someone can make them an offer they can’t refuse (commonly known as ‘a Camden’) but there are two actors in any sale, and too often we just look at is as the big guy snapping up the small guy.

What’s in it for the seller?

Obviously, for the individuals running the brewery, there’s personal wealth. If you’re doing a well-paid job to support yourself and a family, I’d think very carefully about accusing someone of ‘selling out’ on this score. Those people likely put their houses and all their savings on the line to build this thing, and worked longer hours, for less money, than you ever have.

But that’s rarely the only reason for selling – there can be benefits for the brewery too. That beer you love is getting access to a bigger sales force with a wider distribution. The biggest limit on a brewery’s growth is its fermentation capacity. New fermentation vessels are expensive. When Molson Coors bought Sharp’s, many predicted the Cornish brewery would be closed by its new owners. Instead, those new owners delivered lots of shiny new fermenters. OK, so bottled Doom Bar is now brewed in Burton, where there’s greater bottling capacity, but six years after the acquisition, Sharp’s cask ale is still brewing in Cornwall (like it or not.)

On the other hand, is there any dissent in the ranks? When Elysian was bought by A-B Inbev, while the official line was delight around ‘joining forces’, the head brewer quickly walked. Watching how long the key people stick around beyond any mandatory period is usually a good indicator of whether or not the sale was just for the money.

What’s in its for the buyer?

It does seem as though the strategies of the big guys are changing. Historically in the UK, most pubs were owned by breweries. When a brewery was taken over, invariably it was so the acquirer could get their hands on the pubs, and the brewery itself would invariably be closed down (take a bow, Greene King.) It’s also common practice traditionally in any market to buy an annoying competitor just to get rid of them, running down a business you couldn’t beat in the marketplace.

If a non-craft brewery buys a craft brewery that doesn’t own a big pub estate, they want it for the beers themselves and/or for the brand. They want it because they can’t brew and sell those beers within their existing brand portfolio. Now, they don’t lack the brewing expertise to do that – they probably have far better equipment and access to higher quality raw ingredients, and it’s easy (and much cheaper) for them to poach a brewer from a small craft brewery rather than buy the whole thing. What they’re paying for is credibility, an established audience, goodwill, and to a lesser extent, recipes (which they could replicate pretty closely if they had to.)

But the main reason bigger breweries buy smaller ones is that their systems and scale prevent them from acting in the same way as smaller, nimbler, craft brands. Processes designed to sell big commodity brands can’t keep pace with the craft market. So when they do buy these breweries, they tend to run them as separate entities that don’t conform to the same practices as the big brands. A-B Inbev’s many craft acquisitions sit in a separate craft division with its own CEO. Carlsberg is running London Fields as a separate company. Heineken knows it hasn’t a clue about cask ale, so when it acquired Scottish brewery Caledonian, they went big on improving health and safety but apart from that they left the brewhouse alone. These companies aren’t being altruistic about this – they know that if they tried to run it directly, they’d fuck up the thing they just paid a lot of money for.

If the purchased brewery’s brands start getting brewed in the big brewery, using big brewery logistics, there may be some cause for concern (or they may actually be improved on more modern kit.) But if the beer is still being made in the original brewery, by the same people under different management, there’s a chance that even your understandable suspicion that the recipe may be dumbed down is unfounded. I hate the rebranding of Goose Island IPA as ‘Goose’, but Bourbon County Stout, and the range of wood-aged beers produced by Goose Island, remain at least as outstanding as they ever were.

The real threat of these acquisitions is to the broader world of craft, and is a little more insidious and harder to detect. The brewer wants your favourite craft brand because they don’t have anything similar themselves. They don’t want to fuck it up. The brewhouse is probably safe. But then it gets into the hands of an aggressive sales force. The brand might be discounted to push it into wider distribution, which is great for a skint drinker but can take the sheen off the brand’s standing. Or, if it’s a very popular brand, it might be used as a bargaining chip: “Yeah, we’ll sell you the super-cool, sexy craft beer brand we just acquired, but only if you permanently take these other craft beer brands off the bar, and stock our shitty lager as well.” Your favourite beer is still safe, but the brand is tarnished by the new company it keeps, and by the fact that it’s no longer allowed to mix with its old mates. This may sound like paranoia, but it’s common practice. When I worked on Stella Artois, I saw first-hand how both aggressive discounting and aggressive package deals were used to massively inflate the growth of what had been a niche, cult brand with a good deal of credibility. A few years later, it became what we know it to be today.

What past form does the buyer have?

So is your favourite craft beer brand going to go down this route or not? Well, there’s big and big. I’m always confused by the outcry when Duvel Moortgat buys a craft brewery, because Duvel Moortgat makes some of the best beers in the world. One Dark Star fan lamented yesterday on social media that his favourite brewery is now part of just another corporate behemoth. Fuller’s may be many things, but it’s a minnow in the world of corporate beer. Fuller’s has also demonstrated a commitment to the world and ethos of craft beer matched by few of its peers. Yes, Fuller’s also closed the Gales brewery and quietly retired some of its brands after buying that, but the circumstances were different than they are with Dark Star.

Ultimately, each case has to be judged individually.

As craft brewery acquisitions gather pace, there’s an increasing body of evidence to suggest that the demise in the quality and integrity of a once-loved brand is by no means guaranteed. But if your true objection to acquisitions is that they run against the ethos of whatever you define ‘craft beer’ to be, that big corporates should have no place on the indie scene, then prepare for further disappointment: ultimately, everyone is for sale.